International Commercial Arbitration: A Comprehensive Legal Report

This report provides an overview of international commercial arbitration, a crucial mechanism for resolving disputes in international trade. It explores the concept of arbitration, emphasizing its role in providing neutrality and efficiency compared to traditional litigation. The report delves into the freedom of arbitration, highlighting the ability of parties to incorporate arbitration clauses and choose arbitrators. It examines essential norms such as natural justice principles, including the right to a fair hearing and the finality of arbitral decisions. The concept of party autonomy is central, emphasizing the discretion granted to arbitrators within legal and public policy limitations. The report references key legal frameworks, including the UNCITRAL Model Law and the New York Convention, and discusses limitations to arbitration autonomy. The report analyzes the validity of arbitration agreements and the importance of procedural compliance, concluding with relevant case law and legal references.

INTERNATIONAL COMMERCIAL ARBITRATION

INTRODUCTION
• Dispute resolution system is a very important arena of the development of judiciary and
international trade and commerce.
• Disputes arising out of international trade and commerce are dealt with the clause of arbitration.
• The need for arbitration is to allow the parties to feel neutrality of the adjudicating party towards
them.
• Arbitration is the process of the dispute resolution system where the third party is intervened for
the sake of the dispute resolution between the disputing parties.
• Litigation is the fundamental right of the citizens. However, alternatives like Arbitration ensure
faster and time efficient resolution of disputes.
• Arbitration can only be implied when it has been agreed upon by the parties at the time of
entering into the contract or after the breach of the contract.
• The decision of the arbitrator shall be final and binding upon the parties like an order of the
Court.

FREEDOM TO ARBITRATION
• When the parties enter into the contract, they are free to enter into arbitration by way of
incorporating an arbitration clause in the contract.
• Parties are free to choose their arbitrator by way of mutual consent.
• Before the commencement of arbitration, the parties are free to modify the terms of
arbitration as incorporated as the arbitration clause in the contract.

ESSENTIAL NORMS OF ARBITRATION AND
NATURAL JUSTICE PRINCIPLES
• Nemo Judex in causa sua: no person shall judge his own case.
• Fair opportunity shall be given to every party for being heard by the Adjudicating Party.
• Each party has the right to information about the reasons considered for the decision of
the Authority.
• The Adjudicating Authority should decide the case as a final one. It means that the
decision of the arbitration procedure shall be final and binding upon the parties (PHMB
vs. Edna [2001] 5 NWLR (Pt. 707 612))
• In addition to the above requirements, the mandates of the valid arbitral agreement holds
an essential position in deciding the validity of an arbitral award.

PARTY AUTONOMY
• The party acting as a judge is the mutually chosen party who derives its
authority delegated by the parties who select the arbitrator.
• The arbitrator has the discretion to settle the dispute in accordance with the
authority delegated to such arbitrator by the parties.
• However, the arbitrator has limitations to its powers by the virtue of
application of law and public policy.
• The autonomy of discretion is expanding over the limitation of power.
• According to MV Lupex vs. Nigeria Overseas Chartering & Shipping Ltd.
[2003] 10 SCM 71 at 79, it has been explained that arbitration clause is a
written and formal agreement between the parties and shall be construed in
the light of the circumstances in which it was formulated or incorporated in the
agreement.

PARTY AUTONOMY
• According to law of Russian Federation of International Commercial Arbitration, it has
been explained that the will of the parties shall be the depending factor for the
construction of the arbitration agreement and not the terms and conditions of the contract.
• In UNCITRAL Model Law, it has been stated that the choice of law should be explicitly
mentioned by the parties at the time of the formulation of the agreement. Though it can
be modified but it cannot be left silent for the later period for decision.
• In New York Convention, if the parties fail to abide by the mandatory essentials of the
arbitration clause, the court shall not recognize and enforce the arbitral award.
• Thus, party autonomy has gained acceptance in international law and has been
recognized by all the legal jurisdictions of nations.

LIMITATIONS TO ARBITRATION AUTONOMY
• The arbitration agreement between the parties should be a valid one as per the law
governing the parties through the course of business.
• This is usually the substantive law which governs the trade relations of the parties and
the provisions are agreed by them.
• The problem arises when the arbitration agreement is separate from the substantive
contract binding the parties.
• The procedure of arbitration should be in compliance with the rules and regulations of the
law of arbitration as stated by UNCITRAL and the substantive law.
• Generally the law where the arbitration takes place is the binding law for the procedural
compliance of the dispute resolution system.
• The compliance of the principles of the natural justice is an essential element for the
applicability of arbitral procedure in all authorities and tribunals (UNCITRAL MODEL
LAW)

REFERENCES
MV Lupex vs. Nigeria Overseas Chartering & Shipping Ltd. [2003] 10 SCM 71 at 79
The UNCITRAL Model Law 1985, art 19 (1)
The New York Convention 1958, art V (1) (d).
PHMB vs. Edna [2001] 5 NWLR (Pt. 707 612)

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